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Ed Dolan’s Econ Blog US GDP Growth for Q2 Revised up on Stronger Trade Data, Inflation Falls Posted August 31, 2013 Terms of Use: These slides are provided under Creative Commons License Attribution—Share Alike 3.0 . You are free to use these slides as a resource for your economics classes together with whatever textbook you are using. If you like the slides, you may also want to take a look at my textbook, Introduction to Economics, from BVT Publishing.

August 31, 2013 Ed Dolan’s
Econ Blog US GDP Grows at 2.5 Percent Rate in Q2 2013  The second estimate from the Bureau of Economic Analysis showed US GDP growing at a 2.5 percent annual rate in the second quarter of 2013.  That was up from 1.7 percent in reported earlier for the quarter, and from 1.1 percent in Q1 2013  Stronger exports accounted for the largest share of the upward revision

Phases of the Business Cycle
 According to standard business cycle terminology, the recession phase of the business cycle is the downward movement of GDP from its previous peak  The recovery phase is the upward movement from the trough (low point) of the recession and continues until GDP again reaches its previous peak.  Once GDP moves above its previous peak, the expansion phase begins. The latest data show that the expansion is gaining strength again after a slowdown in late 2012 August 31, 2013 Ed Dolan’s Econ Blog

Sources of Growth by Sector
 Consumption contributed 1.21 percentage points to Q2 growth, a little below average for recent quarters  Investment contributed 1.48 percentage points. Fixed investment was much stronger than in Q1 while inventories grew a little slower  Exports resumed growth after a brief decrease in Q1 (see next slide). Imports increased more than exports, so the contribution of net exports was negative  The government sector also made a negative contribution to growth, but the decrease was smaller than in Q1 Contribution by sector to the 2.5% GDP growth in Q2 2013 Note: Imports are recorded in the national accounts with a negative sign, so the -1.11 percentage points shown here represent an increase in imports August 31, 2013 Ed Dolan’s Econ Blog

Exports Show Renewed Growth after
a Pause  Exports played a leading role in GDP growth during the early part of the recovery  Beginning in Q2 2012, weakness in many US trading partners slowed the growth of exports  The latest data for Q2 show renewed strength in the export sector, in defiance of global trends August 31, 2013 Ed Dolan’s Econ Blog

Inflation Indicators Fall Sharply 
In addition to data on GDP and its components, the national income accounts include a number of inflation indicators  The broadest is the GDP deflator, which reflects changes in the prices of all GDP components  Another is the deflator for personal consumption expenditure, an alternative to the more widely publicized consumer price index. The Fed pays particular importance to the PCE deflator  Both of these inflation indicators fell sharply in Q2 August 31, 2013 Ed Dolan’s Econ Blog

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